Apple CEO Tim Cook officially says that he is gay

Although Apple CEO Tim Cook had hinted at his sexual orientation in the past, most notably in a speech at Auburn University in 2013, he announced that he is gay in a personal essay published in Businessweek on Thursday. “So let me be clear: I’m proud to be gay, and I consider being gay among the greatest gifts God has given me,” Cook wrote. Earlier this week, Cook gave an impassioned speech on racial equality and gay rights in Alabama. As the CEO of the world’s most valuable company measured by market cap, Cook is the most prominent openly gay executive in the tech industry.

The Samwer brothers suddenly lose their shyness

It’s become almost cliche to say that the Samwer brothers, Europe’s most successful — and notorious — internet entrepreneurs are publicity shy. A series of exits to the likes of eBay and Groupon have made them millions, but they have tended to keep away from the press, avoid much in the way of public speaking, and even apparently walk out of interviews from time to time. Why? Presumably it is in part because the awkward questions about their copycat ideas just keep on coming.

But is it now time to retire the idea that they just won’t talk?

Two major pieces in the last few days suggest that the three brothers — Marc, Oliver and Alexander — have decided to go on something of a press offensive.

First came Bloomberg Businessweek‘s “How Three Germans Are Cloning The Web”, a piece that hangs itself on the recent copycatting of Fab.com to give an overview of the Samwer’s main company-building vehicle, Rocket Internet. In it, Oliver Samwer goes on the record through a mixture of email and interview.

“There are pioneering entrepreneurs and execution entrepreneurs, and maybe we belong more to the execution entrepreneurs,” says Oliver, who speaks at a rapid clip, frequently punctuating thoughts with a rhetorical “ja?”

“I think the most admirable entrepreneurs are those with original ideas, ja? It’s a unique gift that you either have or you don’t. Just as we might have a very good gift of execution, others have a unique gift for the purest form of innovation.”

Meanwhile, a piece in the new edition of Wired UK, called Inside The Clone Factory, treads similar ground with a little more flourish. Written by Reuters journalist Matt Cowan, it’s obviously been several months in the making (it opens with an interview in Munich last September) and also tries to get to the bottom of what keeps them going.

“If I was motivated by money alone, I would have stopped a long time ago,” he [Oliver] insists. Rather, he suggests that what galvanises them is winning: “To prove over and over again that we’re the best,” he explains.

Both stories are good reads that give some insight into the brothers and into Rocket, and more or less go over the same ideas.

Both stories get to visit the offices of Rocket and discuss the company’s position in the fast-growing Berlin startup scene. And, ultimately, both stories manage to get the brothers (actually, mainly Oliver) to go on the record, even if it’s largely to share the same anecdotes or make the same points.

How much they add to your understanding of the Samwer brothers probably depends on how closely you follow Rocket’s movements.

The meta question is not about what these articles themselves say, or even what the Samwers say about themselves. It’s why they are appearing now. What do they hope to get from these interviews? Is it understanding? Legitimacy? Better press in general?

Whatever the case, the trio are obviously taking on a slightly new approach — and this feels like a watershed of sorts. After all, even though they really end up saying very little, well… at least they’re talking.

Today in Social

Steve Ballmer gets a pretty generous cover story in BusinessWeek. It’s a fun read, but I don’t see much in the way of evidence that Microsoft has its mojo back. Yes, it has a pretty strong product lineup, and Kinect’s innovations could carry farther into the living room. But in NewNet technologies like social media, search and real-time, Microsoft isn’t showing much. I said the company might be one to watch in connected work this year, and every now and then I think Microsoft will build an ad network for Facebook. SharePoint is horribly complex and third parties are doing some of the innovating on top of it. But that’s sort of how a tech platform is supposed to work. If only Microsoft could build a more efficient marketplace around it – and maybe Skype could play a role in a grand unified communications scheme. We’re all watching.

Today in Social

Will the social gaming leader be the next great IPO? The New York Times’ DealBook has a pretty tough piece on the company’s numbers-obsessed culture, and worries about potential talent dilution. Frankly, I thought the most damning bits were the stories of rejected mergers. Michael Arrington, of all people, responds that start-ups are hard work, so quit whining. Earlier, BusinessWeek saw some signs of sluggishness in Mafia Wars 2, and had some observers speculating that gaming fatigue might be setting in, meaning higher customer acquisition costs. Or maybe it’s just a dull game. Zynga’s growth depends on new hits, but BusinessWeek is correct in suggesting its ad revenues might need more focus if virtual goods sales are flat. Meanwhile, Electronic Arts is getting more competitive in Zynga’s space.

Investing in Amazon: The cloud won’t make you rich overnight

Amazon published “disappointing” earnings this week, and the market responded, slashing up to 12 percent off the company’s value. It’s a market that’s preoccupied with fast returns, and so Amazon’s investments in data centers and cloud computing don’t necessarily translate to short-term profits. In other words, the company’s ups and downs highlight contradictions between companies investing to support long-term objectives and running a business to ensure analyst-pleasing growth each quarter.

Amazon has been here before. A BusinessWeek cover story from 2006 captured widely shared sentiment regarding the company’s then-recent foray into building data centers; about Elastic Compute Cloud, the piece found that “Eleven of 27 analysts who follow the company have underperform or sell ratings on the stock — a stunning vote of no confidence.” In September 2011, Forbes painted a different picture, noting, “Amazon shares have defied gravity, jumping 55% year-to-year.”

Those analysts were wrong in 2006. And they’re probably wrong this week. Amazon is not in a high-margin business, where profits come easily. Amazon is dominant in business areas where profits come from achieving massive volumes of extremely low-margin sales. Books, consumer electronics, data center compute cycles: None come close to the 30–40 percent profit margins Apple enjoys.

Nevertheless, Amazon continues to invest in data centers — and to reduce prices — in order to retain its position as the dominant provider of public cloud infrastructure. All of these investments position the company for future growth, with data centers being fundamental to Amazon’s existing cloud business. But all of them hit the bottom line in the latest earnings report, and that has clearly spooked investors once again.

Writing for Forbes before Amazon’s earnings report, CFA Institute‘s Robert Stammers asked whether Amazon’s valuation might boil down to a “cloud bubble,” in which hype and investor exuberance artificially inflate perceived value. Stammers goes on to ask, “Is the cloud a profit opportunity for investors or a product opportunity for companies” (my emphasis). This may be the heart of the problem. Investors are looking for a return that is either large or predictable, and ideally both. Figures such as the $3.2 billion spent by CenturyLink to acquire Savvis make the cloud infrastructure space look like one in which large sums can be made. Maybe they can, but hardware and operations also cost a lot to procure, deploy and maintain. Investors used to software, where profit margins can be 90 percent or more, struggle to adapt.

As Henry Blodget argues at Business Insider, Amazon’s long-term approach to building a business should be welcomed. It is, however, difficult to align with the market’s obsession with short-term growth. Buying into Amazon, or competitors such as Rackspace and CenturyLink, is certainly not a bad idea. You’re not likely to lose money (note: GigaOM Pro is not offering investment advice here). But you’re also not going to see significant returns in the short term.

One of the biggest advantages of cloud computing — for a user — is that providers are able to scale resources in line with demand. But for the user to get that experience, the cloud infrastructure providers (Amazon, Rackspace, etc.) have to spend. Machines have to be bought and maintained in massive data centers, so that they are ready when demand arrives. That spending is expensive, risky and recurring. Amazon has a slight advantage over its rivals because of its scale, and because it can subsidize activities with revenue from other areas of the business. But it still has to upset Wall Street by investing.

Question of the week

Are analysts and commentators right to be criticizing Amazon’s results this week?

Today in Cloud

Bloomberg BusinessWeek reports Gartner figures suggesting that homegrown servers such as those built to Facebook’s Open Compute designs “now account for 20 percent of the U.S. market for servers.” Whilst the article points to the detrimental effect this trend is apparently having on traditional server vendors such as Dell and HP, it paints a rosier picture for chip manufacturers with “Intel Corp. [reporting] its revenue from chips used to craft servers for data centers surged 50 percent in the second quarter.” Intel (presumably?) sees higher margins selling chips this way, with bespoke server build-outs commanding far smaller bulk discounts than behemoths like HP. ZDNet’s Larry Dignan is more cautious than Gartner or BusinessWeek, noting “it’s unclear how many orders Dell, HP and IBM were really losing. There aren’t any concrete examples or figures to back up the premise.” Dignan is right, and continues “For Facebook and Google, the data center is the largest capital expense. It’s only natural that they’d go the DIY route.” The same is far less true for Wal-Mart or Ford or Boeing, where IT infrastructure is a necessary cost (and hassle) of doing business; it’s far easier for them to haggle a good deal for boxes from Dell or HP than to concern themselves with sourcing power supplies, and cables, and chassis’, and solder, and fans, and processors, and RAM, and all the rest. So DIY servers are growing nicely, but only really in niche areas such as the server farms of the web’s giants. The nightmare scenario of the Boeing designed-and-built server in a Boeing data center, or the Wal-Mart designed-and-built server in every Wal-Mart is unlikely to keep Dell and Apotheker awake at night. Far more worrying might be the prospect of new low-margin upstarts entering the business and selling Open Compute-inspired servers to the customers upon which Dell, HP, IBM and all the rest depend.

Today in Cloud

As Platfora, yet another Hadoop-powered startup, secures $5.7million from Andreessen-Horowitz, Bloomberg BusinessWeek offers the CEO Guide to Hadoop. The BusinessWeek articles illustrate some of the ways that companies from Wal-Mart to IBM are benefiting from big data, and provide some of the language that executives will need before they turn up in the data center and demand “a Hadoop.” Platfora’s release, on the other hand, suggests that big data technologies aren’t necessarily ready to be let loose on the wider world. Derrick Harris remarked that “It all sounds great on paper, but there is at least one catch to Platfora: Customers will still have to employ at least a few Hadoop-savvy folks to manage their Hadoop clusters.” Also discussing Platfora, Jeff Kelly noted that “Hadoop is still an immature and rapidly developing software framework and I think an iterative approach towards Big Data analytics is the more prudent model.” For most, the promise of big data insight with Excel-like simplicity is still a long way from being true. The benefits are there for the taking, but a lot of this stuff remains hard to get running.

Verizon’s acquisitions provide an enterprise path to the cloud

At the end of last month Verizon acquired CloudSwitch, adding value to Verizon’s January acquisition of cloud data center provider Terremark. Around the world, big telecommunications providers such as AT&T, BT, Telstra and Verizon have been hard at work, diversifying and seeking new business opportunities as revenue from domestic and international voice traffic continues to decline. While existing expertise and infrastructure made networking and data hosting a logical new endeavor, recent moves such as the Terremark and CloudSwitch acquisitions tap into a growing enterprise requirement for easy and controlled paths out of the legacy data center and into the cloud.

The world’s biggest telephone companies are increasingly well established providers of co-location and hosting services, typically serving large international corporations with deep pockets and widely distributed workforces. Although smaller data center companies such as Savvis and Rackspace have successfully diversified from simple hosting to the provision of cloud computing solutions, the telcos have typically proved less able to manage the transition on their own.

InfoWorld’s David Linthicum commented at the time that Verizon acquired Terremark that “Verizon has the same problem as many other telecommunications giants: It has fat pipes and knows how to move data, but it doesn’t know how to turn its big honking networks into big honking cloud computing offerings.” Verizon is not alone. Elsewhere, Orange (a subsidiary of France Telecom) is simply reselling a GoGrid product to deliver a private cloud solution to customers, removing the need to develop and deploy a solution of its own.

NPRG Senior Analyst Ed Gubbins notes that

locating and building data centers, outfitting them with the necessary equipment, efficient energy supplies and software and building a capable staff is no small task for a company like Verizon with lots of other business segments it must attend to. “It takes time,”‘ Lowell McAdam, Verizon’s chief operating officer said . . . “That’s not our core competency.”

Terremark and competitors are proving more nimble and more able to adapt to changing data center usage patterns. It seems likely that Terremark executives will gain increasing control over Verizon’s existing data center facilities, accelerating the speed with which these can be transformed for the cloud. It remains to be seen, though, whether strategies that worked for Terremark will prove as successful when transplanted into Verizon’s very different organization.

Verizon’s $1.4 billion acquisition of Terremark in January gave the company a cloud computing capability and, as Bloomberg BusinessWeek reported, access to new markets. Although almost certainly requiring much less cash (terms were not disclosed), last month’s acquisition of Massachusetts startup CloudSwitch may ultimately prove more significant to Verizon’s ambitions. CloudSwitch, the winner of the LaunchPad showcase at GigaOM’s 2010 Structure conference, sells software to simplify the process of moving applications from an enterprise data center to the cloud.

Combining CloudSwitch software with existing Verizon data centers and bandwidth creates an increasingly compelling proposition. Customers no longer simply buy the pipe down which their data moves or access to the server on which their data or application is hosted. Instead, they are buying into a complete package, including networking, hosting and the software that links all of it to their existing on-premise data center. Each of these pieces may exist separately elsewhere, and each of those individual components may be cheaper or better than Verizon’s. But Verizon’s ability to package and brand a rounded set of services is likely to prove compelling, especially in industries where IT is simply a necessary cost of doing business. Verizon isn’t just selling bandwidth or storage or data processing; Verizon is selling peace of mind, and at the moment no other data center provider offers quite the same combination of capabilities.

With CloudSwitch, Verizon is no longer simply one choice among many for networking or hosting. Verizon has become a compelling choice for any enterprise that wishes to explore a hybrid environment in which existing on-premise applications are gradually transitioned out to hosting partners and, ultimately, the cloud.

Question of the week

Is acquisition the only way for telcos to compete in the cloud?